SenseTime, the Chinese AI company that specializes in facial recognition software has been put on an investment blacklist by the US. This came right before the company priced its Initial Public Offering on Friday.
This action by the US came as a mark of Human Rights day. Washington said that this is just one of the sanctions taken to commemorate the day. They said that SenseTime enables abuses against the Uyghur Muslims in Xinjiang. The decision to blacklist SenseTime coincides with the Democracy Summit convened by Biden with a 100 other countries.
SenseTime has been placed under a list of “Chinese military-industrial Complex companies” by the US treasury. The list bars any US investors from putting money into these companies. Biden signed an executive order for the same in June following a Trump administration policy to tackle national threats.
Both SenseTime and the US Government have avoided commenting on the sanctions. While Biden stresses that he will not stop criticizing China, the blacklisting might mean losses for US shareholders of SenseTime. Silver Lake, a private equity firm has a 3% stake in the company, followed by Fidelity and Qualcomm. As of now, HSBC is the only western bank involved in the IPO.
The sanctions against the company is one of the latest moves to punish China for its suppression of more than 1 million Uyghur muslims who are forced into labour camps and detained against their will. The US House of Representatives passed a bill to stop importing goods from Xinjiang until they can produce proof that the goods were not manufactured by forced labourers. The White House also announced a diplomatic boycott of the Beijing Winter Olympics. UK, Australia and Canada also followed suit in this decision.
The SenseTime IPO was supposed to be the biggest listing in Hong Kong in months. Chinese Government backed investors have a huge stake in the IPO. Out of the $450 million of investments, $200mn will be from the Mixed-Ownership Reform Fund, created in 2020 by China Chengtong Holdings Group.
SenseTime depends on the Chinese Government for most of its business. Facial recognition softwares, predictive policing and other AI tools contributed to 40% of the company’s business last year.